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The next hot American import in Europe may well be class action litigation. In recent months a number of U.S. firms have been positioning themselves in anticipation of a potential fusilade of class actions across the Atlantic. The first example came earlier this month, when D.C.-based plaintiffs firm Cohen, Milstein, Hausfeld & Toll held a launch party for its long-awaited London outpost after starting operations there in May. The firm is betting that its class action expertise will soon be in demand in Europe, as well. Although there has been very little class action litigation in Europe to date, the United Kingdom, the Netherlands, Germany, Sweden, and Portugal already allow some form of group or class-action-style litigation. Other European countries are considering following suit, and the European Commission has been clamoring for more private enforcement of competition law. Cohen, Milstein, which already has affiliations with various European firms, said in late 2006 it planned to open a London branch in the new year. In May the firm announced it had scooped up Robert Murray and Vincent Smith to spearhead its European push. Murray is a member of the Competition Commission, the U.K. regulatory body that investigates mergers, and a former head of the competition practice at U.K.-based DLA (before it became DLA Piper). Smith is the former head of enforcement of the Office of Fair Trading, the U.K. agency that enforces consumer protection and competition law. In the past couple of weeks the firm has added another partner and an associate, and the office’s head count could hit double digits by the end of the year, says Murray, who is the London office’s managing partner. Name partner Michael Hausfeld says the firm’s plan is to handle litigation for plaintiffs across a broad range of matters, including competition, securities, and employment issues. PRIVATE EYES Competition law is likely to prove to be the most fertile terrain for the firm’s initial work. In recent years, both the European Commission and some national regulators, such as the Office of Fair Trading, have acknowledged the limitations of public enforcement of competition law and have initiated discussions on the need to foster a litigation climate conducive to more private enforcement. “There is much less of a culture in Europe of people suing in the courts and much more of a culture of reliance on public enforcement,” Murray says. “But now, in the last few years, there has been a big change. . . . There are moves to make it easier for business to sue for compensation, for example, for damages from cartels.” In the United States the enforcement of antitrust laws is heavily dependent on the hundreds of civil suits filed by private plaintiffs in federal courts across the country, whereas the Justice Department and Federal Trade Commission generally bring only a few dozen actions a year. Enforcement in Europe, where the European Commission has been cracking down with increasing vigor on cartels found to be engaging in price fixing, is still heavily reliant on regulatory action. Notable fines include $1 billion levied against the vitamin industry in 2001, about $690 million against the rubber chemicals industry, and about $1.3 billion against the elevators and escalators industry. But plaintiffs aren’t encouraged to file private competition suits, and there are major procedural impediments in many European jurisdictions to doing so, including the lack of a class action mechanism; a ban on contingency fees; loser pay rules, which prescribe that the losing party in a court case is obliged to pay both sides’ legal fees; a ban on punitive damages in most jurisdictions; and the lack of treble damages in competition cases. In 2005, the commission launched a debate about the need to facilitate private litigation and is expected to issue its proposals on the matter by the end of this year. But it will be up to national regulators and legislators to consider whether to adopt any of those reforms. STICKING HIS NECK OUT “Most people are thinking this is going to be slow to develop,” says Alan Wiseman, the co-chairman of Howrey’s antitrust practice group. “If this litigation develops, you know Americans are going to find a way to participate in it.” So far no other U.S. class action firms have said they’ll open up shop across the pond. “Other U.S. firms are willing to let Hausfeld stick his neck out and see what happens,” Wiseman says. “I don’t see a swarm of them jumping in as well.” Nonetheless, the U.S. Chamber of Commerce and European industry groups are plenty worried. “The U.S. plaintiffs lawyers have been pretty open about their desire to open the playing field in Europe,” says Lisa Rickard, president of the Chamber’s Institute for Legal Reform. “They are looking to expand their geographic areas for their product lines.” Cohen, Milstein isn’t the only firm betting that there will be a big upswing in private competition litigation in Europe. Wiseman says he’s been raising the issue at Howrey for the past two years. “Last fall we decided that the horizon was short and started analyzing how Howrey should be positioned in Europe,” he says. “I think the time has come where this is going to happen.” Earlier this month the firm, which already has a large antitrust team in Brussels, announced it was launching a London-based competition practice, which will be headed by Thomas McQuail, a partner it snagged from Lovells. The firm is also looking to recruit another three to four partners and half a dozen associates for the group by the end of the year, Wiseman says. The firm’s London practice will be a full-service antitrust practice. “The private litigation is going to be a slow development. It’s not going to keep anyone fully busy for the next year or so,” Wiseman says. “It’s like a snowball going down a hill. The cases will trickle in 2007, we’ll see a little more in 2008, and then by 2009 we may see a full plate.” A CULTURE OF COMPLIANCE Although most European countries have yet to jump on the private enforcement bandwagon, the United Kingdom has made a number of moves to make its litigation system more conducive to private enforcement, including the establishment in 2002 of a specialized court, the Competition Appeal Tribunal, to hear antitrust cases. More recently, the Office of Fair Trading issued proposals in April on the changes needed to facilitate private enforcement and aimed at fostering a “culture of compliance.” The British system is already more plaintiff-friendly than many of its European counterparts in several ways: It allows for a fairly wide scope of discovery compared with many of the civil law jurisdictions in Europe and allows for follow-on actions for damages in cases in which liability has already been determined by the European Commission or a court. For firms, of course, the bottom line is how lucrative the work will really be. The European Commission has issued a preliminary proposal that would allow for the imposition of double damages to cartels. In fact, Cohen, Milstein’s Hausfeld says the firm is preparing claims for immediate attention with respect to half a dozen industries, including the vitamin, chemical, and elevator industries, where the European Commission has already levied hefty fines. “The issue is the method by which we pursue those claims,” Hausfeld says. “There’s been a number of inquiries from cartel members who would rather explore their exposure through communication.” The firm is already engaged in ongoing dialogue with companies from a number of these industries, Hausfeld says, but if it can’t resolve issues in a nonlitigated manner it will file formal claims. Hausfeld says there will also be a U.K. component to the cases Cohen, Milstein has filed in the United States against European air cargo carriers for price fixing and against British Airways and Virgin Airlines for alleged collusion. FIRST FORAY Meanwhile, the United Kingdom’s first class-action-like litigation is wending its way through the court system. This spring, a British consumer association filed suit in the Competition Appeal Tribunal against JJB Sports, a retailer of replica soccer jerseys, for price fixing. JJB Sports is being represented by a team of lawyers from DLA Piper’s London office. “We are the only firm in the U.K. who can legitimately put our hands on our heart and say we are acting on a class action case,” says Mike Pullen, head of DLA Piper’s competition practice for Europe, the Middle East, and Africa. “We have first-mover advantage on that one.” Pullen also predicts there will be more such suits filed. He says he’s refocused his existing competition practice group in anticipation of the “coming wave” of competition litigation. DLA Piper has more than 90 competition lawyers across Europe, and Pullen says he expects that maybe 20 to 30 of them will work on private competition litigation. Skadden, Arps, Slate, Meagher & Flom is also rallying the troops. The firm has put together a group of its class action and litigation specialists to carefully follow the development of class actions throughout Europe, says Andrew Sandler, a D.C.-based partner with the firm. “We are meeting regularly and monitoring the situation,” he says, “so, insofar as our European clients end up confronted with these issues, we are structured and ready to go in terms of being in a position to defend them, as we do with other emerging issues.” Rickard of the Chamber of Commerce says the Chamber has been tracking the development of class-action-style litigation in Europe for the past couple of years. She traveled to Paris and London in late May to meet with business organizations and individual companies to raise awareness about the dangers of the export of U.S.-style class action litigation. “Since we have so much firsthand experience on how class actions can be abused by plaintiffs lawyers,” Rickard says, “we think it’s important to share our concerns about how that can happen.”

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